Companies using Zoom instead of business travel could reduce oil demand by up to 3M bbls/day

Goldman Sachs official says companies switching to Zoom could hit oil demand by up to 3 million barrels per day thanks to reduced business travel

NEW YORK – The explosive growth of teleconferencing apps like Zoom is predicted to have a lasting impact on the way business is done once the pandemic is over. So much so that a Goldman Sachs official is predicting that Zoom will take a huge chunk of the business travel market and hit demand for oil as companies adapt to Zoom and other teleconferencing tools.

“I think you’re going to lose a good chunk of the jet demand that would have been associated with business travel. Our base case is you lose somewhere around 2 to 3 million barrels per day,” said Jeff Currie, Goldman’s global head of commodities research, at a media briefing.

Global oil demand is expected to fall by 9.3 million barrels per day in 2020, according to the International Energy Agency.

Demand for oil has been hurt significantly by the pandemic as countries impose lockdowns to control its spread, and countries have cut supplies. In April, futures for West Texas Intermediate crude traded below zero for the first time ever.

For everything but business travel, Currie expects a strong recovery in demand, but the oil supply could take a little longer to get back online.

But while demand returns to normal, it will be from a base with less business travel. “Before we used to have these internal meetings and things of that nature, and I think this is going to be way more Zoom-oriented, other types of substitutes,” he said.

“Look at the routes that the airlines are planning when they come back, they’re not going to be at the same level that they were previously.”

Currie is not alone in his assessment that airlines are in for a struggle post-pandemic. Warren Buffet last week divested Berkshire Hathaway from all of its airline investments, losing billions of dollars in the process. “The world has changed after Covid-19,” he said.

Airline stocks have plunged since the beginning of the crisis as almost all air traffic has come to a halt. In April British Airways owner IAG warned that the “recovery of passenger demand to 2019 levels will take several years.”